Avoiding Sticker Shock at the Drugstore

Here's how to sidestep an unpleasant surprise next time you pay for a new prescription

Have you, like me, experienced sticker shock at the pharmacy recently?

A few weeks ago, my pharmacist called to alert me to the price of a new medication prescribed to ease my chronic foot pain. His question: Did I really want the lotion, given that my co-pay would be $322.95?!

I declined, explaining that the cost would hurt even more than my foot. How could my doctor prescribe such an expensive medicine without warning me about the price or discussing alternatives? And what good was my health insurance if it was only kicking in $7 for the foot lotion and I’d be paying 46 times that amount?

I was so incensed that I decided to find out why you and I are getting socked with exorbitant prices for some new prescriptions, even if we have health insurance with prescription coverage.

When I called my doctor’s office to voice my concern and see if there was a cheaper alternative, I was told that I was the first patient to complain about the medication’s price and that there was no alternative, short of bearing the pain.

Next, I dialed my health insurer. A customer-service agent explained that my co-payment was high because I hadn’t yet met my annual deductible. But, she noted, even at that point the medicine would cost me $70 because it was a branded (not generic) drug and didn't appear on the insurer’s “preferred” drug list, known as its formulary.

I realize that my story is trivial compared to those of patients with life-threatening and/or debilitating illnesses who can’t afford their drugs. But rising out-of-pocket costs for prescriptions are endangering the health of many Americans in their 50s and 60s who are dealing with assorted medical issues.

Skipping Prescriptions Due to Costs

A June 2012 survey by the Kaiser Family Foundation found that medication costs kept nearly one of every five Americans ages 50 to 69 (21 percent) from filling a prescription in the past year; 17 percent either cut pills in half or skipped doses due to drug prices.

Health insurers and employers offering health insurance are not just raising deductibles. They’re also creating new and more costly classes of drugs.

Expensive New Types of Drugs

For years, there were just three tiers of drugs: Generic or non-brand name, the least costly option; “preferred” name-brand drugs that the insurer can get for less than similar branded drugs; and brand-name drugs not on the preferred list. This last group costs consumers the most — an average of $49 per prescription today, up from $38 in 2004.

But in the last decade, insurers and Medicare have added one and sometimes two costlier tiers that require consumers to pay even more for certain medications. In the most recent survey by the Pharmacy Benefit Management Institute, 25 percent of 274 employers surveyed had four-tier plans, up from 8 percent in 2008.

And instead of charging a flat co-payment fee for these tiers, insurers often make consumers pay “co-insurance,” or a percent of the costs. This co-payment is typically about 30 percent, according to the Kaiser Family Foundation.

Sadly, the specialty tiers affect the most vulnerable Americans — those who need the newer, more expensive drugs to help control a chronic illness, such as Crohn’s disease, or to fight life-threatening afflictions, including many cancers.

“It’s a national problem,” says Jennifer Jaff, executive director of Advocacy for Patients with Chronic Illness, in Farmington, Conn. Jaff told me about one woman with the neuromuscular disorder myasthenia gravis whose specialty-tier drugs cost $3,000 a month. “Who has that kind of money?” she asks. Jaff’s group helped the woman find financial relief through a patient-assistance program funded by pharmaceutical firms.

“The reason a lot of these gels and pain relievers are quite expensive is there are a limited number of manufacturers,” says Les Funtleyder, health-care fund manager at the private equity firm Poliwogg. “In a lot of cases, there are only one or two suppliers who can pretty much charge what they want.”

5 Ways to Lower Drug Costs

Here are five steps you can take to help avoid steep prescription costs:

1. Discuss medication costs with your doctor when you receive a new prescription. Your doctor may not be familiar with the details of your insurance coverage, but should know whether there’s a generic available. The Next Avenue article “7 Questions to Ask About Every New Prescription” offers further help.

2. Befriend your pharmacist. One Consumer Reports survey shows that patients are far more uncomfortable talking about drug prices with pharmacists than with their doctors. Don't be. In fact, your pharmacist may be able to suggest lower-cost alternatives to discuss with your doctor as well as discount drug plans to help cushion the costs (see below).

3. Shop around. Drug prices for the same (or similar) medications vary widely, so call for quotes if you can. Consider alternatives to the drugstore, such as mail-order pharmacies and Costco, which often has some of the lowest prescription prices even for customers who aren’t members of its warehouse club. Also, many major department store and drug store chains offer $4 or $10 prices for generic prescriptions. Just beware of online Canadian pharmacy scams and other phony web discounts.

4. Look for a patient-assistance program if you can’t afford the prescribed medicine. The website for The Partnership for Prescription Assistance, sponsored by pharmaceutical research companies, has a list of 475 patient-assistance programs that let qualifying patients without prescription drug coverage get medications free or nearly free.

Needymeds.org, a nonprofit online information repository, also has useful information about programs that help patients bear prescription costs. Some of the programs are for consumers with prescription-drug coverage; others are for the uninsured.

5. Consider using a discount drug card program. Some of these cards are only for the uninsured; others are available to people with prescription-drug coverage.

You can find the cards at sites like Needymeds.org. AAA and AARP offer cards to their members.

Some drugstore chains provide discount cards for a small fee. Walgreens, for example, charges $20 a year ($35 for family membership) for discounts on more than 8,000 medications.

“If you don’t have prescription coverage, you would be foolish not to get one of these cards, particularly the free ones,” says Edgar Dworsky, founder of the website ConsumerWorld.org.

Don’t expect the savings to be as great as promised, however. Some cards claim an 80 percent savings, but in a recent Consumerworld survey, Dworsky found the savings ranged from zero to 71 percent off the price an uninsured consumer would pay, with an average savings of 16 percent.

Your savings may vary from pharmacy to pharmacy and from drug to drug. Not all pharmacies accept the cards and many drugs are excluded. But any savings will certainly come in handy.

Caroline Mayer is a consumer reporter who spent 25 years working for The Washington Post, covering such issues as product safety, scams, and credit cards. Mayer has received several awards, including the Betty Furness Consumer Media Service Award. She has written for Consumer Reports, CBS MoneyWatch, Ladies Home Journal, Kaiser Health News and others. Follow her on Twitter @consumermayer@consumermayer